The Federal Reserve held interest rates steady in a range of 3.5%-3.75% in its first meeting of the year, as widely expected.

The decision was not unanimous, and two Federal Open Market Committee officials dissented. Federal Reserve governors Stephen Miran and Chris Waller voted to lower interest rates by 25 basis points.

The Fed has signaled it will go meeting by meeting in 2026 to determine the policy path after the Fed cut interest rates in the previous three meetings. Divisions over the path for inflation and the labor market have dominated recent Federal Open Market Committee meetings, with officials in December voting against the Fed's 0.25% rate cut in both directions.

At the December meeting, officials projected just one interest rate cut in 2026.

Meanwhile, questions over Fed independence loom over the January meeting and press conference.

The Supreme Court heard oral arguments in the case over President Trump's attempt to remove Fed governor Lisa Cook from her role earlier this month, and Wednesday's announcement marked the first since the Justice Department's criminal investigation into Fed Chair Jerome Powell was disclosed. Trump is also expected to name his pick for Powell's successor to lead the central bank in the coming days.

Follow along for the latest updates.

The Federal Reserve on Wednesday voted to keep interest rates unchanged, with the target range for its benchmark interest rate remaining in a range of 3.5%-3.75%.

This marked the first time since July the Fed did not vote to lower interest rates at the conclusion of its two-day policy meeting.

Two officials — Fed Governors Stephen Miran and Chris Waller — both voted to cut rates by 0.25%.

In its statement, the central bank wrote:

Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.

Bank of Canada governor Tiff Macklem warned on Wednesday that an erosion of Federal Reserve independence wouldn't just be a problem for the US — it would inc uncertainty around the world.

The Federal Reserve \\"is the biggest, most important central bank in the world, and we all need it to work well,\\" Macklem told reporters after Canada's central bank opted to keep its interest rates steady at 2.25% on Wednesday, as expected. \\"A loss of independence of the Fed would affect us all.\\"

Macklem's comments come as the US Department of Justice has opened an investigation into Fed Chair Jerome Powell, the Trump administration attempts to oust Fed governor Lisa Cook, and as trade tensions between the US and Canada have ratcheted up, with President Trump floating a 100% tariff rate on Canadian goods.

Macklem said that the trade disputes have already caused \\"structural damage\\" to Canada's economy ahead of the renegotiation of the US-Mexico-Canada (USMCA) trade agreement this year. He echoed a recent speech by Canadian Prime Minister Mark Carney, saying that \\"days of open rules-based trade with the United States are over.\\"

On the monetary policy front, Macklem stated that Canada's financial markets are deeply intertwined with those in the US, so a loss of Fed independence \\"would particularly affect us.\\"

\\"Keeping the Fed operating independently, it's good for Americans, it's good for Canadians,\\" he added.

Read the latest updates about the Bank of Canada's interest rate decision.

With Federal Reserve Chair Jay Powell set to approach the dais on Wednesday to discuss the central bank's latest interest rate decision, investors remain focused on updates around who President Trump may nominate to take his place.

With a self-imposed deadline of January set to come and go with no update, reports in the last 24 hours suggest the administration is not quite settled on its nominees. And this despite the pool of potential replacements having been largely set for months.

A report from Bloomberg on Wednesday noted BlackRock executive Rick Rieder — the current betting market favorite, according to odds from Polymarket — has made political donations in the past to candidates including Pete Buttigieg and Trump's GOP rival Nikki Haley.

In a separate report, The Wall Street Journal detailed how each of the four finalists for the Fed role — which include Kevin Warsh, Kevin Hassett, and Chris Waller — have flaws when measured against Trump's clear preference for lower rates and the market's desire for the Fed to maintain its independence.

The Journal also noted that Trump naming a nominee in mid-February \\"would be well within the historical norm for announcing a new chair to replace an incumbent.\\"

Yahoo Finance's Jennifer Schonberger reports:

With the Federal Reserve widely expected to hold interest rates steady Wednesday afternoon, all eyes are on Fed Chair Jerome Powell’s press conference and what clues he provides about when the central bank could cut rates again.

Numerous signs point to not anytime soon.

After making three rate cuts at the end of last year to address concerns over the job market and absorbing more economic data since their last meeting, several Fed officials have signaled a near-term pause, saying “policy is in a good place.”

Matt Luzzetti, chief economist for Deutsche Bank, said he expects officials will “send a strong signal that with the policy rate now within the range of Fed officials’ estimates of neutral, the committee is well positioned to respond to risks to either side of their dual mandate should incoming data warrant an adjustment.”

Krishna Guha, head of global policy and central banking strategy at Evercore ISI, said he thinks the central bank is setting up for an “extended pause.”

“Powell will underscore policy is 'well-positioned' with no urgency to cut again soon,” he said. “Powell will say the FOMC would consider cutting in the months ahead if the labor market weakens materially further. But unless that happens — we think it will not — the Fed will be on hold for the balance of his term as chair that ends in May.”

Read more here.

US stock futures diverged on Wednesday ahead of the Federal Reserve's decision.

Contracts on the tech-heavy Nasdaq 100 (NQ=F) climbed about 0.8%, while S&P 500 futures (ES=F) rose 0.2%. Those on the Dow Jones Industrial Average (YM=F) fell below the flat line.

Treasurys were stable. The 10-year yield (^TNX) hovered at 4.22%, while the 30-year yield (^TYX) rose 2 basis points to 4.83%. The 5-year yield (^FVX) stood at 3.81%.

Investors have been closely watching the recent drop in the dollar, which has continued to fall despite expectations that the Fed would pause interest rate cuts. On Tuesday, President Trump said the \\"dollar’s doing great,\\" shrugging off concerns about the decline.

The dollar index (DX-Y.NYB), which measures the greenback against a basket of currencies, declined to 96.17

President Trump is expected to announce his nomination for the next Fed chair any day, and his eventual pick is unlikely to significantly alter the Fed's existing policy path, BofA Securities senior US economist Stephen Juneau said.

\\"They're probably all supportive of cutting rates more than maybe the current Fed led by Powell is, and cutting rates relatively quickly to, say, a 3% level,\\" Juneau said of the leading candidates for the job.

Fed Governor Kevin Warsh, Fed Governor Chris Waller, and BlackRock's Rick Rieder are seen as the frontrunners for the Fed chair position. National Economic Council director Kevin Hassett is also in the running, though his odds have diminished after President Trump said he'd like to keep Hassett in his current role.

All four candidates have expressed that they'd support further rate cuts, he continued. \\"So ... in terms of the general dynamic, it doesn't change all that much in terms of direction of policy.\\"

Trump selected Jerome Powell to lead the Federal Reserve in 2017, but the president has increasingly criticized Powell for not slashing interest rates by as much as he would like. Powell's term expires in May.

Juneau also stressed that the Fed chair has just one vote and does not set policy alone.

\\"The composition of the Fed may not change all that much other than getting a new Fed chair, so it's really going to depend on what the committee's read of the economic conditions is, and how do you get a majority view in terms of setting policy rates,\\" Juneau said. \\"That's really going to always come down to economic fundamentals, economic activity, inflation, the labor market.\\"

Yahoo Finance's Ivana Pino writes:

Although the Fed’s rate doesn’t directly impact the interest rates set by individual banks for consumer deposit accounts and loans, they are closely correlated. When the Fed raises its rate, for example, interest rates on deposit products — including savings accounts and CDs — also tend to go up. And when it lowers its rate, deposit interest rates generally fall.

... In its last meeting, the committee cut the target range for the federal funds rate to 3.5%–3.75%. Though another rate cut is unlikely this week, it's not possible to predict the Fed's next move. And experts believe that the Fed will cut its rate again at some point this year.

If the Fed does decide to lower the federal funds rate again, CD rates will soon start dropping. However, if you open a CD in the next few days, you will lock in today's higher rates on your balance and continue earning that higher rate even as deposit rates go down.

Should the Fed decide to keep rates the same, it won’t have a direct impact on CD rates, which means now is as good a time as any to open an account and take advantage of historically high interest rates. As it stands, the best CD rates today hover around 4% and up.

Read more here.

Fed Chair Powell will almost certainly be asked about AI when he takes the podium on Wednesday.

\\"The impact to labor market inflation is going to be so key for central bankers to try and navigate when it comes to their policy decisions,\\" Principal Asset Management chief global strategist Seema Shah told Yahoo Finance on Tuesday, adding, \\"Certainly, that's a part of the narrative.\\"

Shah explained that while it's still too early for the Fed to start factoring AI into its policy decisions, the technology is something that the Fed and other central bankers will be researching.

In the third quarter, US productivity growth surged to 4.9%, boosting US GDP growth and prompting some economists to point to artificial intelligence as behind the rise. But it's still quite difficult to measure how much of an effect AI is having in the aggregate.

At the same time, AI productivity gains could also pose a risk for the economy in the short term.

\\"If that AI boost to productivity is so significant that it causes job loss, that could be a problem for 2026,\\" Moody's Analytics chief economist Mark Zandi told Yahoo Finance.

At the December policy meeting, Fed Chair Powell stated that the implication of AI would be higher productivity growth, and he also mentioned that he hasn't seen evidence of AI showing up in layoffs yet. But Powell emphasized that it's still \\"early days.\\"

After cutting interest rates in the final three meetings of 2025, the Federal Reserve is expected to hold off on further changes to the fed funds rate on Wednesday.

In 2025, Fed officials were divided on whether to cut rates to boost the cooling labor market or keep rates elevated to continue to bring down inflation to the central bank's targeted 2% level. A government shutdown that delayed and distorted government data on the economy only complicated matters.

But now, as Yahoo Finance's Jennifer Schonberger previously reported, several prominent members of the Fed have stated that they view policy as being “in a good place.”

An unexpected decline in the unemployment rate put the Fed on course to keep rates steady. In December, the unemployment rate ticked down to 4.4% while the US added 50,000 jobs, according to Labor Department data.

Recent readings on inflation haven't swayed the Fed from that course.

According to the latest Personal Consumption Expenditures Index, the Fed's preferred measure, core inflation rose 2.8% year over year for a combined October and November period. The PCE report was a stale reading due to government shutdown delays. Core inflation measured by another index, the Consumer Price Index, remained at a sticky 2.6% in December.

While inflation remains higher than the central bank would like, it has only moderately grown in recent months. Plus, some officials, such as New York Fed president John Williams, believe inflation will continue to come down after the \\"one-off\\" effects of tariffs wear off.

With another government shutdown looming, the Fed could be entering another (partial) data fog. Still, markets will be listening to Fed Chair Powell's speech closely for any changes to the economic outlook and policy path.

Following three interest rate cuts in 2025, the Federal Reserve is back in its wait-and-see mode, Yahoo Finance's Hal Bundrick writes. Current thinking, as measured by federal funds futures trading, puts the next rate cut no sooner than June.

What does that mean for the savings rates and interest charges that affect your money? Bundrick writes that 2026 continues the long stretch of modest earnings on deposit accounts.

For checking accounts, the convenience of liquidity limits your earning power. The national average of interest paid on checking accounts has barely budged much this year and remains at 0.07%.

Interest rates on savings accounts are only marginally better, remaining at 0.39%. But savings accounts are for near-term money.

High-yield savings accounts have been more effective at paying interest. Rates are still barely clinging to 4%, with some financial providers slightly above or below that.

This is one category where rate shopping really pays off. Especially as interest rates move lower.

Read more here.

The Federal Reserve's next interest rate decision seems all but baked in, but this week's post-decision press conference could hold more importance than usual.

Markets will be scrutinizing Wednesday's press conference for information about the path of interest rate cuts and dissent within the committee — but also for answers on how Fed Chair Powell is thinking about central bank independence as pressures mount from the Lisa Cook hearings and the Justice Department's investigation into Powell himself.

Powell will almost certainly field more questions on the political pressure, but Fed watchers expect that, characteristically for the Fed chair, he's unlikely to reveal much.

“We’re not anticipating Powell to really talk much about it but to really be focused on the interest rate decision,” Principal Asset Management chief global strategist Seema Shah told Yahoo Finance on Tuesday.

The Federal Open Market Committee meeting began at 10:00 a.m. ET as scheduled, a Federal Reserve spokesperson said.

The interest rate decision is expected to come down on Wednesday at 2 p.m. ET.

As of Tuesday, traders priced in near certainty that the Fed would hold rates steady, putting a 97.2% probability on rates remaining at the 3.5% to 3.75% range. Traders saw just a 2.8% chance the Fed would cut rates by 25 basis points, according to CMEGroup's FedWatch.

US stocks mostly rose as markets opened ahead of the start of the Federal Reserve's two-day policy meeting.

The S&P 500 (^GSPC) and Nasdaq (^IXIC) climbed 0.3% and 0.6%, respectively, at the open, while the Dow Jones Industrial Average (^DJI) lost about 0.7% on the backs of declines in health insurer stocks like UnitedHealth (UNH).

Treasurys held steady with the 10-year yield (^TNX) standing at 4.22% and the 30-year yield little changed at 4.81%.

The Fed will bring its first policy decision of the year on Wednesday. While it is widely expected to hold the benchmark interest rate steady, markets are watching for signals on the timing of future rate cuts.

Read more about today's market action ahead.

The next Federal Open Market Committee meeting is scheduled to begin on Tuesday, Jan. 27, and run through Wednesday, Jan. 28, when Fed Chair Powell is expected to deliver a statement and press conference announcing the FOMC's interest rate decision.

The FOMC holds eight regularly scheduled meetings per year. After January's meeting, the FOMC isn't scheduled to reconvene until March.

Here's the Fed's full meeting schedule for 2026:

January 27-28

March 17-18*

April 28-29

June 16-17*

July 28-29

September 15-16*

October 27-28

December 8-9*

* Meeting associated with a Summary of Economic Projections.

Read more frequently asked questions about the Fed here.

Although mortgage rates often anticipate a Fed rate move, rising or falling well before the FOMC announces its decision, rates have found another motivator in recent weeks: President Trump's policy proposals.

Yahoo Finance's Hal Bundrick writes:

When the Fed goes into its \\"wait and see\\" mode, as it is now, mortgage rates look for a catalyst elsewhere. Current fed funds futures, as measured by the CME Group, expect a quarter-point rate cut no sooner than June. But mortgage rates have done anything but wait.

In a Jan. 21 analysis, Joel Kan, vice president and deputy chief economist of the Mortgage Bankers Association, noted recent lower home loan rates.

“Mortgage rates declined further last week, driving another big week for refinance applications, which saw the strongest level of activity since September 2025,\\" Kan said. Loan applications, as measured by the MBA composite index, increased by over 14% from the previous week, and refinancing rose by 20% over the same one-week period. Refinances were 183% higher than the same week one year ago.

On Thursday, Jan. 22, Freddie Mac reported that 30-year fixed-rate loans increased by only three basis points from the three-year low of 6.06% reported just last week.

Without a Fed rate cut in sight, what moved rates over the past two weeks? It was President Trump announcing potential housing affordability initiatives.

Read more here.

The US Federal Reserve is among several central banks providing policy updates this week and next.

Notably, the Bank of Canada is widely expected to hold interest rates at the same level on Wednesday. After cutting last year, economists forecast the BoC will hold the policy rate in a neutral position at 2.25%, though they are closely watching the renegotiation of the US-Mexico-Canada Agreement (USMCA) this year for clues on the policy path for the rest of 2026.

Brazil's Central do Brasil will also hold a monetary meeting on Wednesday, while Sweden's Sveriges Riksbank and the South African Reserve Bank meet on Thursday.

Next week, the European Central Bank's monetary policy committee is scheduled to convene on Thursday, Feb. 5, as is the Bank of England. The following day, investors will hear from Mexico's central bank, the Banco de Mexico.

Many central banks, including the European Central Bank, Bank of England, and Bank of Canada, are considered to be in a cautious holding position as inflation has cooled but risks to growth remain.

As Yahoo Finance's Ben Werschkul reported Monday, the odds of a US government shutdown coming at the end of the month rose sharply over the weekend.

And after a 43-day shutdown complicated the Federal Reserve's task in the fall with data delayed or canceled, the same challenge could face the central bank ahead of its March meeting.

This is the meeting, notably, that many on Wall Street expect to see the Fed cut rates again.

\\"Should another extended shutdown occur, it would leave the FOMC in a tricky spot,\\" wrote Wells Fargo economists Michael Pugliese and Tom Porcelli in a note on Monday.

\\"The lack of visibility that arises from receiving limited economic data could thrust an already divided FOMC into a period of stasis. Fed officials lamented the lack of clarity on inflation during the last shutdown. We expect they would again use this argument to delay additional cuts. We have maintained that the window is closing for the Fed to cut rates again under Chair Powell, and another extended shutdown would not help.\\"

US Treasury yields declined on Monday while stocks and gold rose ahead of the Federal Reserve's policy meeting and a busy week of Big Tech earnings.

The 10-year yield (^TNX) declined 2 basis points to 4.21%, while the 30-year yield (^TYX) also dropped 2 basis points to 4.8% as the odds of a government shutdown rose following a shooting in Minneapolis.

Long-dated yields continued to ease after a sell-off in Japanese bonds and geopolitical tensions led to a spike last week. While bouts of turmoil in markets and questions over Fed independence have created volatility to start 2026, investors broadly view the US economy as stable and expect the Fed to hold interest rates steady.

Read more about Monday's market action in stocks, gold, and more.

While investors expect the Federal Reserve will make no change to its interest rate policy on Wednesday, how many FOMC officials vote against the action could emerge as the biggest headline from the meeting.

In December, three officials voted against the Fed's decision to cut rates by 0.25% — Fed Governor Stephen Miran voted for the Fed to cut rates by 0.50%, while Kansas City Fed and Chicago Fed presidents Jeff Schmid and Austan Goolsbee both would've preferred the central bank keep rates unchanged.

Both Schmid and Goolsbee issued statements in the days following the meeting to elaborate on their thinking.

This also marked the first time since 2019 that there were dissents on both sides of the Fed's decision.

The first Federal Open Market Committee meeting of 2026 is expected to see the central bank make no change to its benchmark interest rate target, which currently stands in a range of 3.5%-3.75%.

“I don’t think there will be a whole lot of activity other than holding rates. The Fed is at a point where they can be patient, and we don’t need to do anything. Short, sweet,” said Wilmer Stith, senior bond portfolio manager for Wilmington Trust.

“I think it’ll be see what data says, decide, and wait for more data and decide, gently gliding down their landing.”

Read Jennifer Schonberger's full story here.